Industry Updates

Invesco to introduce liquidity requirements on emerging market high dividend ETF

Securities will need a minimum daily trading volume to qualify for the index

Lauren Gibbons


Invesco is set to introduce liquidity requirements on its emerging market high dividend ETF after changes from index provider FTSE Russell.

FTSE Rusell has implemented a minimum average daily trading volume threshold in the index tracked by the $163m Invesco FTSE Emerging Markets High Dividend Low Volatility UCITS ETF (HDEM).

To be included in the index, stocks must have an average daily trading volume of over $5m while current constituents need to have $3.75m, effective 18 March.

In a shareholder notice, Invesco said: “The periodic review of constituents will, from the effective date, include an assessment of the liquidity of each constituent by calculating its recent three-month average daily trading value (ADTV).”

Chris Mellor, head of EMEA ETF equity product management at Invesco, said: “The growth in the number of stocks in the emerging market universe over the years has meant that the number of both smaller and less liquid stocks that might be eligible for inclusion in the index has increased.

“The index provider is proposing to revise the index methodology to address this potential issue.”

HDEM, which tracks the FTSE Emerging High Dividend Low Volatility index, assigns higher weights to companies with a higher trailing 12-month dividend yield as opposed to their market cap value.

The FTSE Emerging High Dividend Low Volatility index measures the performance of the top 100 least-volatile and high dividend-yielding stocks in the FTSE Emerging index.

Constituents in EMHD are currently capped at 4.5%.

Other news from the US giant came last week when it promoted Fabrizio Arusa to head of ETFs for Italy.

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